2017-08-18Staff Report 2 Taxpayers in January heard that a tax amnesty was to be introduced from February to July 2017. The programme ‘Tax Amnesty’ was explained through media and revenue offices around the country. A tax amnesty can be defined as a “programme that provides for a reduction in real terms of taxpayers’ declared or undeclared tax liabilities as established by law” (Le Borgne). Many countries have offered amnesties programmes during recessionary period and are designed to cover all taxpayers. The purpose of tax amnesties is to increase revenues and tax compliance. Tax amnesty may include the following: Only the penalties and interest components of the liability may be forgiven, partially or fully; the basic tax liability may be reduced; interest and penalties stop accruing together; interest may be assessed at something less than market rates. The Ministry of Finance initiated a programme called tax amnesty intended to raise revenue during economic crisis and increase compliance. Tax amnesty are intended to meet the fiscal needs as seen around the world as the best way to raise revenue which is still outstanding. As a matter of fact, tax amnesty gives taxpayers the opportunity to repay all taxes (capital amount, interest and penalties) on a reduced percentages or parts of unpaid taxes without being subject to prosecution and penalties. The Ministry of Finance offered 80 percent of interest to be written off and taxpayers to pay 20 percent. However, not all amnesties raise considerable tax revenues around the world. During economic crisis revenue is needed in order to close the budget deficit. Short-term revenues to be raised during amnesties depend on whether a significant amount of taxpayers choose to take part in amnesties or not. It is not yet clear how many taxpayers participated in the tax amnesty in Namibia. Tax amnesties “provide delinquent taxpayers with a one-time opportunity and many opportunities to clear their debt without being subject to criminal or civil penalties” as stated by Parle and Hirlinger. The one-time opportunity may not come again if taxpayers wait in anticipation of the prolonged tax amnesty. Ministry of Finance has done a great job to provide tax amnesty or immunity for limited period to individual taxpayers, small businesses, medium and large businesses for non-compliance without being subjected to additional tax, interest, penalties or prosecution. It is possible that offering tax amnesties might not generate additional revenue, as non-compliant taxpayers will continue in anticipation of additional future amnesty. Therefore this anticipation may cause taxpayers not to participate. Non-compliance may lead to a short fall. The psychological part of tax is that nobody likes paying taxes and amnesties are needed to entice taxpayers to pay. Extension is needed to bring all taxpayers into participation but this may not happen sometimes. Many times Tax amnesties focuses on economic variable and forget the psychological variables. The benefits of tax amnesties for Namibia are to raise revenue on the short of time and provide for the opportunities for the tax evaders to comply. This benefit is intended for all taxpayers as an opportunity to participate. NIPA called for an extension on the tax amnesty for a period of one year. The issue surrounding the tax amnesty is that when taxpayers anticipate further amnesties, they may lower their tax compliance and honest taxpayers could consider it unfair when tax evaders get away without punishment. It is better to start paying than to wait for the second chance. * Oscar Matengu holds an MPhil in Taxation from the University of Pretoria. 2017-08-18Staff Report 2
